U.S. mortgage rates rose for a second straight week, a trend that could continue as key support from the government ceases at the end of the month, a closely watched mortgage survey showed on Thursday.

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.99 percent for the week ended March 25, up from the previous week's 4.96 percent, according to a survey released by Freddie Mac, the second-largest U.S. mortgage finance company.

Rising mortgage rates do not bode well for the housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention. Mortgage rates are expected to rise when the Fed -- the U.S. central bank -- stops buying mortgage-related securities at the end of March.

Eric Belsky, executive director at Harvard University's Joint Center for Housing Studies, said most economists believe that when the Federal Reserve exits it will send interest rates 25-50 basis points higher.

This is based on modeling of what is called option-adjusted spreads, he said.

That said, other forces also influence interest rates and these could move in either a downward or upward direction over the next couple of months, offsetting or exaggerating any move caused by the Fed exit from mortgage-backed securities purchases, he said.

The rate for the latest week is also above the year-ago level of 4.85 percent and the record low of 4.71 percent in early December. Freddie Mac started the survey in 1971.

Mortgage rates inched up slightly this week as bond yields rose even further, Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.

LOW RATES, LIMITED APPEAL

The housing market remains fragile, with recent weak data on new and existing home sales indicating the sector has hit a lull after showing signs of a recovery late last year.

The Mortgage Bankers Association said on Wednesday U.S. mortgage applications fell for a second straight week.

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.34 percent in the latest week, up from 4.33 percent the prior week.

Interest rates on other types also rose.

One-year adjustable-rate mortgages (ARMs) were 4.20 percent in the latest week, up from 4.12 percent the prior week. The rate on the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, was 4.14 percent, compared with 4.09 percent a week earlier.

A year ago, 15-year mortgages averaged 4.58 percent, the one-year ARM 4.85 percent and the 5/1 ARM 4.98 percent.

(Editing by Chizu Nomiyama)

Freddie mac Mortgage